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Even With 'Continued Strength in Food,' BJ's Sees Lower July Comps

NATICK, Mass. -- Spurred by solid sales of bakery, cheese, dairy, frozen, meat, and produce items, BJ's Wholesale Club, Inc. yesterday posted July 2007 sales of $650.5 million, a 6.0 percent increase from July 2006's $613.9 million. July comparable-club sales rose 1.5 percent, including a negative impact of 0.6 percent from gasoline sales and a negative impact of 0.4 percent from the absence of pharmacy sales vs. last year. Last year the retailer reported a July comparable-club sales rise of 1.9 percent, including a 1.1 percent contribution from gas sales.

August 9, 2007, 08:00 pm

NATICK, Mass. -- Spurred by solid sales of bakery, cheese, dairy, frozen, meat, and produce items, BJ's Wholesale Club, Inc. yesterday posted July 2007 sales of $650.5 million, a 6.0 percent increase from July 2006's $613.9 million. July comparable-club sales rose 1.5 percent, including a negative impact of 0.6 percent from gasoline sales and a negative impact of 0.4 percent from the absence of pharmacy sales vs. last year. Last year the retailer reported a July comparable-club sales rise of 1.9 percent, including a 1.1 percent contribution from gas sales.

Comparable-club food sales for the month increased about 5 percent, particularly in the perishables categories noted above. A dip in general merchandise of about 1 percent reflected a considerable decline in air conditioners sales compared with last year, in addition to a decrease furniture and toy sales, partially offset by strong sales of books (particularly the recently released "Harry Potter and the Deathly Hallows"), televisions and video game hardware.

For the second quarter ended Aug. 4, 2007, total sales grew 8.2 percent, to $2.25 billion and comparable-club sales went up 3.7 percent, including a 0.7 percent contribution from gas sales and a negative effect from the absence of pharmacy sales vs. last year of 0.4 percent. For the year-ago period BJ's posted a total sales increase of 5.7 percent and comparable-club sales growth of 1.8 percent, including a 1.9 percent contribution from gas sales.

"There were a number of factors impacting July comparable-club sales results, which decelerated from the 4 percent and 5 percent increases we reported in May and June," explained BJ's chairman, president and c.e.o. Herb Zarkin in a statement. "First, we were up against a significantly higher level of coupon distribution as well as very strong air conditioner sales in July 2006. Additionally, last July we offered 90-day trial memberships throughout the month as part of our Annual Spring Trial Membership Program. This year the cut-off for trial membership signups was July 9. And finally, gasoline had a negative impact of approximately 0.6 percent in July, vs. a contribution of approximately 1 percent in both May and June. Taking these factors into account, together with our continued strength in food, we are pleased with our sales results for July 2007."

As for the second quarter, "comparable-club sales results were consistent with our guidance and showed positive momentum from the first quarter," noted Zarkin "Comparable-club sales of food increased by approximately 5 percent, and general merchandise sales increased by approximately 0.5 percent."

For the 26-week period ended Aug. 4, 2007, total sales rose 7.4 percent and comparable-club sales grew 3.0 percent, including a 1.1 percent contribution from gas sales and a negative impact from the absence of pharmacy sales vs. last year of 0.4 percent.

By region, the highest sales increases were in Metro New York and the Mid-Atlantic. Sales went down in the Southeast region, which, according to the company has been experiencing a higher level of competition and self-cannibalization than locations in other parts of the country.